Episode 68 Open Season

 The Federal Benefits Open Season starts November 8 this year and goes through December 13. This is the opportunity for our federal employees out there to re-look your benefit choices and explore your options for 2022. During the annual open season, you can enroll in a Federal Employees Health Benefits (FEHB) Program and the Federal Employees Dental and Vision Insurance Program (FEDVIP) plan. You can also change plans, change plan options, you can change enrollment type between self, self plus one, or family coverage, or cancel your enrollment. Do nothing and your current coverage will automatically continue.
 
 You also have choices to make with the Federal Flexible Spending Account Program (FSAFEDS). https://www.fsafeds.com With an HCFSA, you use pre-tax dollars to pay for qualified out-of-pocket health care expenses. The maximum amount you can allot to an HCFSA is $2,750 (per individual) a year and the minimum is $100. You declare your savings amount and set up the allotment during open season and the total amount you elect to save will be available on day one of 2022. Your fund contributions are withdrawn automatically from each paycheck and deposited into your FSA before taxes are deducted. You can only carry over $550 of a the Health Care FSA from one year to the next.

With the Dependent Care FSA (DCFSA). You can contribute up to $5,000 a year  to pay for care for your child under age 13.  It also covers care for your spouse or a relative who is incapable of self-care and lives in your home. Dependent Care FSA savings cannot be carried over to the next year at all.  If you do nothing during open season your FSA election will NOT automatically continue. You must reenroll. 

 A High Deductible Health Plan (HDHP)  combines a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA), medical coverage and a tax-advantaged way to save for future medical expense.  With an HDHP, you must meet the entire annual deductible before plan benefits are paid for services other than in-network preventive care. Once you hit the  catastrophic limit, the plan pays 100% of the allowable amount. Th insurer will set up an HSA for you and put a set amount of money in it. You can also put contribute to the account with pre tax dollars. Funds deposited in your HSA are not taxed, interest on the HSA grows tax free, and you can withdraw it tax free to pay qualified medical expenses. There are more rules, so be sure to read more on this before making a decision. I’ll put a link to a good OPM fact sheet on HSAs in the show notes.  https://www.opm.gov/healthcare-insurance/fastfacts/high-deductible-health-plans.pdf

Don’t assume your plan is staying the same. Review your plan documents every Open Season for changes to  and what new options may be available. Is there are newer plan choices that is a better buy. Read the plan brochures. Some FEHB plans offer basic dental and vision benefits or discount programs. You might be better off in a FEHB plan with some dental benefits than paying a separate FEDVIP premium.

If you require extensive medical treatment in the 2022 it may be worth paying higher premiums for a plan that covers more of your claims. If everyone is healthy, consider paying less for a plan with less coverage and putting the extra cash in savings, like an FSA or HSA. 

OPM has a great online tool you can use to compare the various plans available and their costs for 2022. You can search for the plan options using your location or employee type, and you can review any changes to the plan you already have. https://www.opm.gov/healthcare-insurance/healthcare/plan-information/compare-plans/

Transcript

Announcer: 0:14

Welcome to the Money Pilot Financial Advisor Podcast, where you team up with Money Pilot host, former Army helicopter pilot and your host Katie Cannon to put your money where your heart is. Together, we'll tackle issues big and small so you can take charge and lead your financial life.

Kathleen Cannon: 0:53

Hello and welcome to Episode 68. The federal benefits open season starts November 8 this year and goes through December 13. This is the opportunity for our federal employees out there to relook your benefit choices and explore your options for 2022. So today, we'll talk about the Federal Employees Health Benefit Program or FEHB, the Federal Employees Dental and Vision Insurance Program or a FEDVIP and the Federal Flexible Spending Account program, FSAFEDS and will give a shout out to Health Savings Accounts or HSA s which are available to employees enrolled in high deductible health care plans. So hold on for some Open Season tips to help you prepare for 2022. What can you do during Open Season? During the annual Open Season, you can enroll in a Federal Employees Health Benefits Program, and the Federal Employees Dental and Vision Insurance Program. You can also change plans, change plan options. You can change our enrollment type between self, self plus one, or family coverage. Or you can cancel your enrollment. What if you do nothing? Your current coverage will automatically continue. So if you're satisfied with your current FEHB and FEDVIP plans, you don't need to do anything. But you do have to change plans if your current plan has ended coverage in your area, or your plan is leaving the FEHB or FEDVIP programs. When is your enrollment or change effective? The first day of the first pay period after January 1, 2022. You also have some choices to make with the Federal Flexible Spending Account program(FSAFEDS) and I'll put a link to that in the show notes. What is an FSA? With an Health Care FSA, you use pre tax dollars to pay for qualified out of pocket health care expenses. The maximum amount you can allot to an healthcare FSA is $2,750 per individual a year and the minimum is $100. You declare your savings amount and set up the allotment during Open Season. The nice thing is, the total amount you elect to save will be available on day one of 2022. Your fund contributions will be withdrawn automatically from each paycheck and deposited into FSA, before taxes are deducted. If you and your spouse are both federal employees, you can both enroll in health health care FSA and each contribute up to the maximum of $2,750 each. You can only carry over $550 of a health care FSA from one year to the next. So be sure to spend before the end of the year. There's also a Limited Expense Health Care FSA and it's used just for qualified out of pocket dental and vision care expenses. employees with health savings accounts which I'll mention in a little bit, can't also have regular health care essays. But you can have this Limited Expense Health Care FSA to use just for vision and dental. But wait, there's still one more flexible spending account, the dependent care FSA. You can contribute up to $5,000 a year to this account to pay for care for your child who is under age 13. This includes before and after school care, babysitting, they care even summer day camp. It also covers care for your spouse or a relative who may be incapable of self care and lives in your home. One big thing to remember is that unspent dependent care FSA savings can not be carried over to next year at all, so use it, don't lose it. Again, the big draw for these flexible spending accounts is the money you can contribute is withdrawn from your paycheck before taxes are deducted. So you can end up paying less in taxes and taking home more of your paycheck. What are your FSA options during Open Season? Well, you can enroll or re enroll. What if you do nothing, your election will not automatically continue. You must re enroll during Open Season to continue your flexible spending accounts for the 2022 benefit year. Also, remember, if you want to carry over unused funds from 2021's health care FSA, or limited expense health care FSA, you must re enroll for 2022 for Dependent Care FSA. OPM has extended a special grace period to incur and receive reimbursement for 2021 dependent care flexible spending accounts funds through December 31 of 2022. But don't assume your 2022 funds will be rolled over into 2023. Other things to know the minimum annual election amount for all FSA Feds account is$100. The contribution maximum for health care or limited expense health care FSA is$2,750 per participant. The maximum for the dependent care FSA is $5,000 per family. The effective date of enrollment or change for FSA is January 120 22. Okay, one more special account. I want to mention a high deductible health plan. hdhp is a plan that combines a health savings account or HSA or a Health Reimbursement Arrangement, traditional medical coverage and a tax advantaged way to save for future medical expenses. HSA is are entirely different than the FSA as we were just discussing. High Deductible Health plans have higher annual deductibles and higher out of pocket maximum limits than other FEHB program plans. With a high deductible health plan, you must meet the entire annual deductible before your plan benefits are paid for services other than just in network preventative care. Once your annual out of pocket expenses for covered services in network hits the pre determined catastrophic limit. The plan does pay 100% of the allowable amount remainder of the calendar year. To qualify, you can't be covered by another health plan, including a spouse's health plan, or Tricare. With the high deductible health plan, the insurers will set up an HSA for you and put a set amount of money in it for you. You can also contribute to the account with pre tax dollars, funds deposited into your HSA or not taxed. interest on the HSA grows tax free and you can withdraw it tax free to pay qualified medical expenses is the Triple Crown of tax free. Now there are more rules so be sure to read more on this book before making a decision, I'll put a link to a good OPM fact sheet on HSS in the show notes as well. Alright, a few more pointers as you head into open season. Don't assume your plan is staying the same. Premiums change, certain benefits may be added, or your favorite benefits may be taken away. Your doctors could have left the plan and expensive drug you take may no longer be on the formulary, meaning your out of pocket expenses may be much higher next year. Even if you're not thinking of switching plans, you should review your plan documents every Open Season to see benefits important to you have changed or to see what new options may be available. And check to see if there's a newer plan choice that might be a better buy. A high deductible health plan with a health savings account can provide a big savings and have terrific catastrophic coverage. Remember, higher premium plans don't necessarily mean higher benefits. Read the plan brochures. They are tedious and long, but really provide the clearest view of what life in that plan would be like. Review your dental and vision needs. FEDVIP plans are generally good buys. But some FEHB plans offer basic dental and vision benefits included in the health plan and some others offer dental and vision discount programs. If you have low dental expenses, you might be better off in an FEHB plan with some dental benefits than you would paying this separate than FEDVIP premium. Picking the best plan for you and your family means reviewing your own medical and financial situation. Do you or a covered family member have a condition that will require extensive medical treatment in 2022. It may be worth paying higher premiums for a plan that covers more of your claims. if everyone's healthy, and only sees the doc for checkups and minor illnesses, you may be better off paying less for a plan with less coverage, and putting the extra cash and savings like a Flexible Savings Account or Health Savings Account. Check out your spouse's medical plan if you're married, and compare it with your FEHB. Most people find FEHB plans provide better coverage at a lower cost. So you may be able to drop the other coverage and save money. OPM has a great online tool you can use to compare the various plans available and their costs for 2022. You can search for the plan options using your location or employee type. And you can review any changes the plan you already have. And I'll put a link to that in the show notes as well. So remember, know your options. Review your current plan to see what's changing for 2020 to check out what else is being offered, and compare it to what you have now. Reevaluate your specific family health situation and focus in on the options that matter the most to you. If you do nothing, you'll remain enrolled in your current FEHB and FEDVIP plans. But you must re enroll every year for a flexible savings account and spend the balance before the end of the year. Except for a $550 health care FSA rollover. There's no rollover for dependent care FSA, so use it or lose it. In contrast, healthcare savings accounts are a different beast entirely. HSA can provide the Triple Crown of tax free savings for medical expenses, but must be paired with a high deductible health care plan. With possible higher out of pocket expenses. There are more rules than I could cover today. So if you're interested in that option, check out the details at opm.gov have a great open season this year and we'll talk to you again next week.

Announcer: 14:53

Thank you for joining today's podcast. Like to find out more? Visit us at www.moneypilotadvisor.com Let's team up and land your financial life.